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Rating Action:

Moody's upgrades select tranches of America West Airlines and US Airways EETCs

19 Dec 2014

New York, December 19, 2014 -- Moody's Investors Service upgraded its ratings on certain Enhanced Equipment Trust Certificates ("EETCs") originally issued by America West Airlines, Inc. ("AWA") or US Airways, Inc. The Corporate Family Rating of their parent company, American Airlines Group, Inc. ("AAG") is B1. The rating outlook is stable. Moody's notches its EETC ratings issued by subsidiaries of AAG off of the B1 Corporate Family Rating. No other EETC or other ratings of US Airways, Inc., AWA, American Airlines, Inc. or US Airways Group, Inc. are affected.

Upgrades:

..Issuer: America West Airlines, Inc.

.Series 1999-1 A-tranche to Baa3 from Ba1

.Series 1998-1 B-tranche to Ba1 from Ba3

..Issuer: US Airways, Inc.

.Series 2010-1 B-tranche to Ba1 from Ba2

.Series 2011-1 B-tranche to Ba1 from Ba3

.Series 2012-1 B-tranche to Ba1 from Ba3

.Series 2012-2 B-tranche to Ba1 from Ba2

.Series 2013-1 B-tranche to Ba1 from Ba2

RATINGS RATIONALE

The upgrade of the rating of the A-tranche of America West Airlines, Inc.'s 1999-1 EETC to Baa3 from Ba1 reflects Moody's expectation of an improving loan-to-value including because of planned investments in the collateral. AAG announced on December 8, 2014 that all of its 93 A319s in the legacy US Airways fleet will receive new seats as part of the two-year, $2 billion Customer Improvements program. While this transaction is not cross-defaulted or cross-collateralized, Moody's believes the A319 will remain a work horse in AAG's fleet .The new interiors on the aircraft will increase their utility to American and could lower the potential for disaffirmation, even though the transaction has neither cross-default or cross-collateralization provisions. Five A320s round out the collateral and are expected to remain core to the airline's network.

America West Airlines, Inc.'s 1998-1, B tranche was upgraded to Ba1 from Ba3 reflecting Moody's expectation of an increasing equity cushion in the next 18 months, principally a result of faster scheduled amortization of the debt. Six of the oldest A319s in the fleet and two A320-200s collateralize this deal, which is not crossed. However, the increasing equity cushion supports the upgrade of the rating as does the updates of the interiors on the A319s.

The upgrades of the B-tranches of US Airways, Inc.'s 2010-1, 2011-1, 2012-1, 2012-2 and 2013-1 transactions reflect Moody's opinion that the aircraft in each of these transactions will remain important to American's network over their respective tenors. Each matures between April 2017 and November 2021, are collateralized by a mix of Airbus A320, A321 and A330-200 aircraft that delivered new no earlier than 2009 and are cross-defaulted and cross-collateralized. The 2012-2 and 2013-1 transactions are each collateralized by a mix of A321s and A330-200s that delivered new in either 2013 or 2014. Moody's believes that each of these aircraft models will remain core to the company's network. Moody's estimates of current loan-to-values on these transactions range between about 75% and the low 80% range. Scheduled amortization over the next 12 months will reduce the loan-to-values to between about 70% and about 75%. The LTV of 2011-1 is the highest of these five transactions. However, the similarity of the collateral and its respective utility to the fleet and network plans of AAG support it being rated the same as the other four of these EETCs.

Moody's assigns and monitors EETC ratings by notching from an issuer's Corporate Family rating. The inclusion of certain structural features in a particular EETC, such as whether a transaction is cross-defaulted and cross-collateralized help determine the extent to which an EETC rating is notched above the operator's Corporate Family rating. Additionally important is Moody's opinion of the value of the collateral, such as its importance to the operator, its market liquidity in the event of a Certificate default and the current level and future trend of over-collateralization. Moody's believes that cross-default reduces the probability that an airline will reject an EETC that is collateralized by at least some aircraft that are and will remain relevant (essential) to its network over a transaction's scheduled life, following a bankruptcy filing. Cross-collateralization has the potential to enhance recovery following an EETC default as it traps value in the trust for the benefit of certificateholders. Transactions issued before 2007 do not provide these enhancing structural features.

Future changes in the credit quality of the underlying airline, in Moody's opinion of the importance of particular aircraft models to a particular airline's network, or in its estimates of aircraft value trends which will affect estimates of loan-to-value can result in changes to EETC ratings. Changes to Corporate Family ratings can also result in upgrades or downgrades of EETC ratings.

The methodologies used in these ratings were Global Passenger Airlines published in May 2012, and Enhanced Equipment Trust And Equipment Trust Certificates published in December 2010. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

American Airlines Group ("AAG") is the holding company for American Airlines, Inc. and US Airways, Inc. Together with American Eagle and US Airways Express, these airlines operate an average of nearly 6,700 flights per day to 339 destinations in 54 countries from their hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix and Washington, D.C.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. For ratings issued on a support provider, this announcement provides certain regulatory disclosures in relation to the rating action on the support provider and in relation to each particular rating action for securities that derive their credit ratings from the support provider's credit rating. For provisional ratings, this announcement provides certain regulatory disclosures in relation to the provisional rating assigned, and in relation to a definitive rating that may be assigned subsequent to the final issuance of the debt, in each case where the transaction structure and terms have not changed prior to the assignment of the definitive rating in a manner that would have affected the rating. For further information please see the ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.

For any affected securities or rated entities receiving direct credit support from the primary entity(ies) of this rating action, and whose ratings may change as a result of this rating action, the associated regulatory disclosures will be those of the guarantor entity. Exceptions to this approach exist for the following disclosures, if applicable to jurisdiction: Ancillary Services, Disclosure to rated entity, Disclosure from rated entity.

Regulatory disclosures contained in this press release apply to the credit rating and, if applicable, the related rating outlook or rating review.

Please see www.moodys.com for any updates on changes to the lead rating analyst and to the Moody's legal entity that has issued the rating.

Please see the ratings tab on the issuer/entity page on www.moodys.com for additional regulatory disclosures for each credit rating.

Jonathan Root
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Robert P Jankowitz
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's upgrades select tranches of America West Airlines and US Airways EETCs
No Related Data.
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